THE CONTESTED NATURE OF INNOVATION

Extant literature considers innovation as a major driver of competitiveness and improved firm financial performance. Rust and Koen (2011:89), for instance, opine that private equity and venture capital firms in the capital markets sector engage in social innovation by investing capital with the goal of delivering both economic and social value. Innovation is regarded as one of the key factors contributing to national economic growth, competitiveness, and higher living standards and is at the heart of the knowledge-based economy.

Various studies also emphasized that, in a highly competitive environment, a firm’s ability to keep up with the pace of innovation and maintain ongoing innovation efforts is critical to its survival and growth (Dess, 1987:259; Therrien, 2003:7; de Jong &

Hulsink, 2010:3; Ozorhon et al., 2010:23; Rust & Koen, 2011:89). It is this innovative ability, it can be contended, that guides firms in adapting, integrating and reconfiguring their technological capabilities, managerial capabilities and resources endowment as appropriate in a changing environment. It is therefore crucial for ECFs to rely on a variety of network partners in various roles to identify and exploit opportunities for innovation (de Jong & Hulsink, 2010:5). Despite this key importance of innovation there is still contention among scholars in terms of the acceptable definition of the concept. Since the development of the economic theory by Schumpeter at the beginning of the 20^th century, the definition of innovation continues to change, as

evidenced by the various definitions in mainstream literature (OECD, 2005; Webster, 2008; Gunday, Ulusoy, Kilic & Alpkan, 2011).

4.2.1 CONCEPTUALIZING INNOVATION

As previously indicated, the lack of a common definition for innovation has resulted in scholars adopting various definitions of the concept. Innovation is a complex and multidimensional process, with varying definitions (Robinson & Stuberrud, 2012:2).

For some authors, innovation may be characterized as the creation and adoption of new knowledge to improve the value of products, processes, and services; or that results in some economically useful output or outcome (Mugabe, 2011:1).

According to Gyekye, Oseifuah and Vukor-Quarshie (2012:916), Schumpeter was the first to draw attention to the significance of innovation in economic development.

Schumpeter, cited in Voeten, Haan and de Groot (2009), defined innovation as “the introduction of new or improved products, production techniques and organisation structures as well as the discovery of new markets and the use of new input factors.”

Adding to the definitional collection on innovation, the OECD (2006) conceptualizes innovation as “the implementation of a new or significantly improved product (goods or services) or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations”.

Gault in Mugabe (2011:1) defines innovation as ‘the creation of value from knowledge, a driver of economic growth’. For Sexton, Barrett, Miozzo, Wharton and Leho (2001:531), innovation refers to “the effective generation and implementation of a new idea, which enhances overall organisational performance”. Some of the key features of innovation identified by Mugabe (2011:1) include risk, non-linearity and learning.

Sexton et al. (2001:531) identified key dimensions or features of innovation as including:

 Idea – ideas are taken to mean the starting point for innovation. Ideas can be administrative and technical in nature.

 New - not all ideas are recognized as innovations and it is accepted that newness is a key distinguishing feature. The idea only has to be new to a given firm, rather than new to the ‘world’. Further, the newness aspect differentiates innovation from change. All innovation implies change, but not all change involves innovation.

 Effective generation and implementation – innovation requires not only the generation of an idea (or transfer of a ‘new’ idea from outside the company), but also its successful implementation. The implementation aspect differentiates innovation from invention.

 Overall organisational performance – innovation must improve organisational performance, either individually or collectively, through the supply chain.

Innovations that improve some isolated aspect at the expense of overall performance are undesirable.

Common to the foregone definitions are product/service and process characteristics of innovation. Going by the OECD’s (2006) definition, innovation for ECFs in this study would imply product or process innovation. In addition, marketing and organisational innovation would reflect the extent to which ECFs apply new ideas in delivering their products (construction outputs), processes and management practices. Being in the construction industry, ECFs would be seen to be innovative in their product delivery methods (marketing) when they come up with new products or new processes in their operations. ECFs could, for instance, come up with new structural designs (such as a new roofing system that can simultaneously generate electricity) or introducing new ways of undertaking their construction projects (such as the introduction of labour- intensive construction methods as opposed to machine-intensive methods).

The various definitions of innovation from literature reveal that innovation can take various forms, such as product/service innovation, process innovation, market innovation and organisational innovation. These dimensions of innovation are discussed in detail in the next section.

4.2.2 INNOVATION DIMENSIONS

While Schumpeter (1934) also described different types of innovation--new products, new methods of production, new sources of supply, the exploitation of new markets and new ways to organize business-the OECD (2006) introduces four different innovation types: product/service innovation, process innovation, marketing innovation and organisational innovation. These innovation typologies, presented by the Oslo Manual, are regarded as the primary international basis of guidelines for defining and assessing innovation activities.

4.2.2.1 Product/service innovation

A product/service innovation refers to the introduction of a good/service that is new or significantly improved regarding its characteristics or intended uses (OECD, 2006).

Product/service innovation is a difficult process, driven by advanced technologies, changing customer needs, shortening product life cycles and increased global competition. It can be based on new uses or combinations of existing knowledge or technologies. For success, product/service innovation must involve strong interaction both within the firm and between the firm and its customers, and suppliers and customers must be willing and able to buy the new products or services (Valmohammadi, 2012). ECFs would typically engage in delivering products (roads, buildings, sewage systems, etc.) hence the relevance of product innovation.

4.2.2.2 Process innovation

Valmohammadi (2012) refers to process innovation as an activity that involves making beneficial changes to the process that produces products and services. Process innovation embraces quality function deployment and business process reengineering. A process innovation is the implementation of a new or significantly improved production or delivery method (OECD, 2006). This includes significant changes in techniques, equipment and software. For example, ECFs can innovate less complicated survey equipment for taking levels (surveying) with built-in software that would allow records to be kept and reconfirmed from time to time.

4.2.2.3 Marketing innovation

OECD (2006:48) indicates that marketing innovation is concerned with improving the mix of target markets and how chosen markets are best served. A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing. Marketing innovations target addressing customer needs better, opening up new markets, or newly positioning a firm’s product on the market with the intention of increasing firm’s sales. ECFs cannot rely on word of mouth or the power of their social networks only but must also engage in active marketing, as in branding of vehicles and earthmoving equipment, coupled with catchy websites will ensure a competitive advantage.

4.2.2.4 Organisational innovation

An organisational innovation is the implementation of a new organisational method in the firm’s business practices, workplace organisation or external relations (OECD, 2006:49). For example, construction sites are used to a more projectized organisational structure as opposed to a normal functional organisational structure.

Through organisational innovation ECFs may opt for a more matrix type of an organisational structure where ECFs can draw on the services of employees who would not normally be directly engaged in a project. This was further justified by Hansen and Birkinshaw (2007) when they concluded that organisational innovation can increase a firm’s performance by reducing administrative costs or transaction costs, improving workplace satisfaction, gaining accesses to non-tradable assets (such as non-codified external knowledge) or reducing costs of supplies.

While literature is more unanimous on the various dimensions of innovation (which are vital toward ECFs gaining and maintaining a competitive advantage), there has also been diverse understanding among scholars regarding the classification of the construct. The next section delineates the various classifications of innovation.